Coronavirus relief or ‘bailout’? The debate over aid to states.
As Congress considers further coronavirus aid, some lawmakers worry that states may use federal money to solve prepandemic budgetary problems.
“Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as example) and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help? I am open to discussing anything, but just asking?” President Donald Trump tweeted in late April.
But while many states with deep pension debts are left of center, says Christopher Mooney, a professor of state politics at the University of Illinois at Chicago, that doesn’t mean more aid would amount to “blue state bailouts.”
Why We Wrote This
There’s debate in Washington over whether to prioritize emergency relief or fiscal responsibility. Specifically, should aid be withheld from states that have poor fiscal track records? Our infographic sheds light on the controversy.
Editor’s note: As a public service, all our coronavirus coverage is free. No paywall.
For one thing, the response to COVID-19 has created a genuine fiscal emergency.
Also, data from the Rockefeller Institute of Government in New York shows that Democratic states such as New Jersey, Massachusetts, and Connecticut pay the federal government far more than they receive each year. And some deep-red states such as Alabama and Mississippi, meanwhile, get much more than they give.
The imbalances largely stem from demographics. America’s progressive tax system means that residents in wealthy states (often heavily urban and Democratic-controlled) pay higher federal taxes than those in other states. Meanwhile, urban-oriented states usually have high demands for public services – and hence relatively high spending by state and local governments, says Professor Mooney.
In other words, ideology may give directions but demographics are in the driver’s seat.
And when it comes to how states are managed, says Professor Mooney, that will almost always be a matter of opinion.
“When you start throwing out words like ‘well run’ or ‘poorly run,’ unless you have very specific criteria in mind ... it’s subjective by definition,” he says.
U.S. Federal Reserve, Rockefeller Institute of Government, Ballotpedia, U.S. Bureau of Labor Statistics
Editor’s note: As a public service, all our coronavirus coverage is free. No paywall.
